Clubbing of dummy unit clearances sustained where evidence showed concealment, extended limitation, and penalty were justified.

Clearances of an adjacent unit may be clubbed with those of the main unit where evidence shows the adjacent concern was a dummy arrangement with no effective manufacturing facility, machinery, or power for the essential process, and the goods were in fact manufactured in the appellant's premises while its name was used to avail small scale exemption. On those facts, clandestine manufacture and suppression justified invocation of the extended period, sustained the duty demand on the clubbed clearances, and supported penalty.

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Issues: (i) Whether the clearances of the adjacent unit could be clubbed with those of the appellant unit on the footing that the former was only a dummy unit; and (ii) whether the demand of duty, invocation of the extended period, and penalty were justified.

Issue (i): Whether the clearances of the adjacent unit could be clubbed with those of the appellant unit on the footing that the former was only a dummy unit.

Analysis: The evidence showed that the adjacent unit had no effective manufacturing facility during the material period, obtained electricity connection only later, and lacked the machinery and power required for welding, which was an essential process for manufacture of the goods. The statements of the concerned persons and the investigation record established that the goods cleared in the name of the adjacent unit were in fact manufactured in the appellant's premises and that the appellant had used the other unit's name to avail the small scale exemption.

Conclusion: The clubbing of clearances was upheld and the appellant's challenge on this issue failed.

Issue (ii): Whether the demand of duty, invocation of the extended period, and penalty were justified.

Analysis: The findings disclosed clandestine manufacture and clearance without following central excise procedure, coupled with suppression of the true nature of the clearances. In these circumstances, the extended period was correctly invoked, the duty demand on the clubbed clearances was sustainable, and the penalty was warranted.

Conclusion: The duty demand, extended limitation, and penalty were sustained against the appellant.

Final Conclusion: The appeal was dismissed and the order confirming duty and penalty on the appellant was left undisturbed.

Ratio Decidendi: Where the material evidence shows that a nearby unit is only a dummy arrangement and the clearances in its name are made by the main unit to evade duty and avail exemption, the clearances may be clubbed, the extended period may be invoked for suppression, and penalty is sustainable.

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